Bloomberg News

Panasonic Shares Fall After Ratings Cut by Moody’s: Tokyo Mover

By Mariko Yasu
September 11, 2012

Panasonic Corp. (6752), the Japanese
electronics maker trying to recover from a record annual loss,
fell in Tokyo trading after Moody’s Investors Service cut its
credit ratings, citing weak earnings and higher debt.

The television, camera and battery maker fell 1.7 percent
to 534 yen at the close of trading in Tokyo, after dropping as
much as 3.3 percent, the biggest intraday decline since Sept. 3.
Its long-term credit rating was lowered two levels to Baa1 from
A2 and its short-term rating by one rank to Prime-2 from
Prime-1, Moody’s said in a statement yesterday. Both ratings are
assigned with a stable outlook, the ratings company said.

Consumer-electronics makers Sony Corp. (6758), Sharp Corp. and
Panasonic are restructuring after a strong yen and competition
with South Korea’s Samsung Electronics Co. (005930) and Cupertino,
California-based Apple Inc. (AAPL:US) pushed them into losses. Panasonic’s
downgrade is because of the company’s low profitability and net
debt that increased almost eightfold after acquisitions of Sanyo
Electronics Co. and Panasonic Electric Works Co., Moody’s said.

“The question remains whether Panasonic can restructure
itself in a manner that generates consistent and sustainable
competitive advantages in the TV and panel businesses,” Moody’s
said. The company is “plagued by weak consumer demand in major
global markets, pressure from low-cost producers, and a stronger
yen,” it said.

The maker of Viera televisions and Lumix cameras is trying
to turn around its unprofitable TV, electronic component and
battery operations this fiscal year after closing plants and
eliminating 36,000 jobs amid falling prices and a surging yen.
New President Kazuhiro Tsuga has pledged to revive the Japanese
manufacturer “by all means.”

Panasonic’s Debt

Panasonic, Japan’s biggest appliance maker, forecasts net
income of 50 billion yen ($639 million) for the year started
April 1, compared with a 772 billion-yen loss the previous 12
months. The manufacturer may rearrange businesses and withdraw
from unprofitable operations, Tsuga said in July.

The company’s net debt increased to more than 950 billion
yen at the end of June from about 120 billion yen at the end of
March 2010, Moody’s said. Panasonic will probably cut costs by
130 billion yen this fiscal year after reducing them by 64
billion yen in the first quarter from a year earlier, Chief
Financial Officer Hideaki Kawai has said.

Last month, Moody’s said Sony’s Baa1 long-term rating and
Prime-2 short-term rating may be lowered. Moody’s cut Sharp’s
short-term ratings to Not-Prime from Prime-3 earlier this month,
citing a high level of short-term debt and weak operating
performance.

To contact the reporter on this story:
Mariko Yasu in Tokyo at
myasu@bloomberg.net

To contact the editor responsible for this story:
Michael Tighe at
mtighe4@bloomberg.net